Looking ahead to growth in 2017

Regional economies could be buffeted in 2017 by potentially seismic events in three global powerhouses: the United States, Europe and China. Rupali Karekar reports on how five Asean nations, and China, are likely to fare in this uncertain climate.


Economic growth is expected to pick up this year.

The government's reforms and infrastructure drive led to improved business conditions last year, and should continue to support growth this year.

Private consumption will remain resilient, says FocusEconomics senior analyst Angela Bouzanis.

Bank Indonesia cut benchmark rate six times last year to support growth.

Inflation is expected to move above 4 per cent - within the central bank's target of 3 per cent to 5 per cent.

The rupiah is likely to come under renewed downward pressure if looser fiscal policy in the United States prompts the Fed to raise rates there.

"We see a good chance that Indonesia can reach a fairly healthy growth of 5.2 per cent this year," said OCBC bank economist Wellian Wiranto in a note.

Next year, GDP growth is expected to pick up to 5.4 per cent.



Bank Negara Malaysia held its key rate at 3 per cent - unchanged for a third straight meeting - this month to help bolster the ringgit which has depreciated about 6 per cent against the US dollar since Mr Donald Trump's win in the US election.

With more Fed rate increases to come this year, the door for further policy easing in Asia may have closed, Bloomberg said.

The economy is projected to grow 4 per cent to 5 per cent this year on the back of higher oil prices, a weaker ringgit and robust consumption growth in the US.

But Malaysia will remain vulnerable to a slowdown in China, its second largest trading partner, observed FocusEconomics analyst Luis Lopez Vivas.

Inflation is forecast to average between 2 per cent and 3 per cent.

Next year, the economists expect growth of 4.3 per cent.


The domestically driven economy grew faster than expected at the end of last year, on robust domestic demand.

Gross domestic product grew 6.6 per cent in the fourth quarter from a year earlier.

Solid private consumption and rising infrastructure spending will underpin economic activity this year, but the momentum could be undercut by outbursts by President Rodrigo Duterte, whose rhetoric against major trade partner, the US, has rattled investors.

A possible tightening in financing conditions, an incomplete implementation of the reform plan and a deterioration in business sentiment are the main downside risks, said FocusEconomics' Massimo Bassetti.

The central bank left key rates unchanged last year, but HSBC economist Joseph Incalcaterra said it is "a clear candidate for tighter monetary policy this year", with robust growth, expanding loans and higher fuel excise taxes having an impact on consumer price index.

Economic growth is seen slowing to 6.4 per cent this year and 6.3 per cent next year.


Thailand saw moderate economic activity last year, with subdued private investment and manufacturing virtually stagnating.

The death of King Bhumibol Adulyadej last October cast a cloud over consumer sentiment, especially due to an official year-long mourning period.

Recent indicators suggest exports rebounded strongly and manufacturing growth rose at a multi-year high in the fourth quarter, lifting the sub-par annual performance.

Monetary and fiscal policies are expected to help take the economy on a path of steady growth.

The central bank sees headwinds from external uncertainties such as the direction of US trade policy, decelerating tourism from China and political developments in Europe, which could dampen foreign demand.

FocusEconomics economist Marlene Rump said the projection is for the economy to expand 3.2 per cent this year and 3.3 per cent next year.

Inflation is expected to average 1.6 per cent.


Singapore's economy surprised on the upside in the final quarter of last year and avoided a technical recession, a rebound driven by a turnaround in the manufacturing and services sectors.

This year, it is expected to lose steam, with high household indebtedness likely to weigh on private consumption, FocusEconomics analyst Massimo Bassetti said in a note.

Growth in fixed investment will likely be restrained and the tight labour market will continue to limit growth.

A shift to greater protectionism globally could weigh further on the outlook.

Inflation could be pushed up by higher commodity prices and the vanishing of low oil price base effects to average 0.8 per cent.

Singapore benefits from important structural strengths, such as a highly transparent regulatory environment, a low tax burden and a flexible and strongly market-oriented economy, but a tight labour market, restrictive immigration policies and slow productivity growth count among the major challenges.

FocusEconomics analysts project a growth of 1.6 per cent this year.

Next year, the panel sees economic growth picking up to 1.9 per cent.

 See PDF: Impact on ASEAN


This article was first published on Jan 31, 2017.
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